U.K. Indie Film Distribution Hits Breaking Point as ‘Santosh’ Saga Exposes Market Crisis: It’s an ‘Utter S—-show’

Months after receiving solid reviews in Cannes — where it premiered in the Un Certain Regard sidebar — Sandhya Suri’s fiction feature debut “Santosh” was selected to represent the U.K. in the Oscars’ international film category. The news gave the film the honor of following in the footsteps “The Zone of Interest,” which became first U.K. film to win the award earlier this year.

A Hindi-language crime thriller about a widow who inherits her late husband’s police officer job and a story examining class, religion and misogyny in rural India, “Santosh” later won the Golden Frog for debut director in Camerimage, landed a European Film Award nomination and won two British Independent Film Awards. In France, the film had a successful box office run over the summer, with more than 150,000 admissions to date. Most recently, it made AMPAS’ international film shortlist.

But “Santosh” achieved almost all of this without having a U.K. distributor lined up, sales agent Mk2 and its producers having spent months struggling to find a suitable partner.

Indeed, there was eleventh hour race against the clock in early December to get a deal over the line in order to make the BAFTA submission date, Vertigo Releasing eventually coming on board having teamed with Indian banner Civic Studios.

But as many industry execs and experts across have noted, the problems to find a buyer had very little to do with “Santosh” as a film — which just a few years ago by would have been snapped up almost instantaneously. Rather they were more to do with what at least two people have described to Variety as the “utter shitshow” that is the current state of U.K. distribution when it comes to arthouse or foreign language titles. As one exec more eloquently puts it, the situation with “Santosh” “highlights the crisis in U.K. indie distribution … nobody’s buying and everybody’s terribly cautious.”

Santosh may be an extreme example, but it’s not alone. “On Becoming a Guinea Fowl,” the Zambian-language sophomore feature from BAFTA nominee Rungano Nyoni following her critically acclaimed debut “I Am Not a Witch” (the U.K.’s Oscar submission in 2018) was one of the buzziest and best-received films in Cannes, and in years gone by would likely have been acquired before the festival even began. While A24 already had the film for the U.S., it took until October for a U.K. deal to be struck with Picturehouse Entertainment.

Danny Perkins, who used to run StudioCanal UK and now heads up distribution and production outfit Elysian Film Group, points to several factors that have come to a head in the U.K. Among these are the country’s historically high ticket price split in favour of cinemas over distributors, a Pay-One window that hasn’t become nearly as profitable as other markets for less mainstream titles, and VOD not stepping up to match the decline in revenues from DVDs. “And you’ve got all of that with a backdrop where revenues against content have come down, but the price of content hasn’t accordingly,” he says. “So stuff costs more and it’s making less money for distributors.”

“Santosh” wasn’t made in the U.K., but it was co-produced by BBC Film (as was “On Becoming a Guinea Fowl”), which meant local free TV rights were off the menu for the distributor (because they were with the BBC). As one exec notes, with BBC Film and Film4 being two of the three main financiers of independent film in the U.K. (alongside the British Film Institute), there’s been something of a tussle between the funders and the distributors. “The BBC and Film4 are, understandably, saying, well of course we’re going to take free TV, that’s our business. And the distributors are like, ‘Well, don’t blame us if we’re not buying them.’ They don’t want to take that risk of spending £100,000 on P&A if they haven’t got TV to back it up. But then who else is going to finance these films?”

Then there’s the fact that pay TV doesn’t — generally — buy non-English language films. So essentially, in the case of “Santosh” — an arthouse foreign language title backed by BBC Film — there was left little left for the distributor but theatrical.

And in the U.K. at least, theatrical has become increasingly difficult for indie titles, especially ones without star power and a major distributor behind them.

In 2023, the box office for U.K. independent films in 2023 was just $48 million, an almost 50 percent drop on 2022 and a meagre 3.8% share of the total overall. A quick glance at the list for this year shows a market almost entirely dominated by Hollywood. Of the top 50 films of 2024, 46 were released by studios — and only StudioCanal’s “Paddington in Peru” (not exactly a title anyone would describe as indie or arthouse), made the top 25.

But the U.K. almost stands alone among the major European markets when it comes to this situation. Other sizeable box offices across the continent have each had numerous non-studio successes. In France, local hits “A Little Something Extra” and “The Count of Monte-Cristo” top the 2024 charts, Germany saw “Chantal in Fairyland” and “School of Magical Animals 3” muscle their way into the top 10, and Italy had “The Boy With Pink Trousers,” “Un Mondo a Parte” and “Parthenope” in the top 15 (while 2023 smash hit “There’s Still Tomorrow” continued to do solid business).

According to one British sales agent, it’s reached a point where a U.K. distributor faced a potential mutiny among staff should it have acquired another British indie title. “They honestly said they’d leave, because they sweat blood and tears to try to monetize these films, but they end up making a loss.

For Zygi Kamasa, the former Lionsgate UK head who last year launched distribution and production banner True Brit Entertainment, the U.K. market has fallen into two camps, with the arthouse and foreign language sector — which heavily relied on ancillary revenues that are now no longer there — definitely the one that is struggling.

“Even digitally, the likes of Sky, Amazon, iTunes and Google, they only want the top 30 titles, and the pay TV partners like Netflix, Amazon and Sky aren’t really buying much of those film and, if they are, they’re paying a pittance,” he says.

When it comes to independent British films, it’s the larger budget and more commercial films where there’s still a viable market, but these are still few and far between. Kamasa points to StudioCanal’s 2024 releases “Back to Black” (box office of $15.7 million) and “Wicked Little Letters” ($12.1 million) as examples. “They’re working theatrically, they work on pay TV, streamers want them,” he says, but claims there’s a growing chasm for smaller mid-budget indies. “It’s split even further between films that are not big enough and not small enough — there’s very little marketplace for them.”

While at Lionsgate in 2007, Kamasa helped launch German-language smash hit “The Lives of Others,” which earned almost $5.5 million from the U.K. box office alone. “We also sold bucketloads of DVDs,” he says. “But I just don’t’ think it would have done the business it did then today — and certainly wouldn’t have had the life it had on ancillary.”

There’s also a degree of uncertainty among the U.K.’s distributors.

Both Curzon and Picturehouse have been considered the leading homes for arthouse features over the years, especially festival favorites (and Curzon had a local success this year with Irish hit “Kneecap”). But both have recently been caught up in financial complications away from their core businesses.

Last month, Curzon — part of a group which also includes the Curzon cinema chain and streaming platform — was bought by U.S. private equity group Fortress from the Cohen Media Group in a foreclosure auction. Variety understands that Fortress has no plans to keep hold of Curzon and will look to resell the business at a future date, as it did with the Alamo Drafthouse chain earlier this year (which it sold to Sony).

Meanwhile Picturehouse, as part of the Picturehouse chain of cinemas, is embroiled in the ongoing drama involving parent company, the theater giant Cineworld. Earlier this month, Cineworld closed six cinemas across the U.K. as part of a major debt restructuring plan arranged by its hedge fund backers, but for years there’s been question mark over the future of Picturehouse within the group.

“It’s not a very strong sector,” notes a distributor. “No one really knows what’s going on with either of them.”

There is Mubi, which has become a significant player theatrically (“The Substance” narrowly missed out on the U.K. Top 50 for 2024 with $4.5 million), but as one producer says, “doesn’t buy all that many films.”

Further down, smaller distributors such a Modern Films, Studio Soho and Conic are highly regarded for championing a broad range of low-budget arthouse titles, but don’t have the firepower or resources when it comes to throwing their weight behind titles looking for decent theatrical play or awards contention.

“I love them, don’t get me wrong, but are you going to get the release you need,” says a producer.

Some help is at hand for distributors via the British Film Institute’s Audience Projects Fund, which purports to support “ambitious, audience-facing independent U.K. and international film” with various grants. But this has faced criticism for its recently-tweaked eligibility requirements, not least a new rule stating that distributors more than 50% owned by non-U.K. companies or individuals can no longer apply. This essentially disqualified Curzon (which, with its own streaming platform, also came up against the BFI’s rule that films couldn’t get funding if they released day-and-date).

Filmmakers are now calling for more intervention.

“Since leaving the EU, U.K. distributors have lost all the support systems from Creative Europe, and now some of them from the BFI,” says one. “It just feels like they need support somehow.”

But it’s not all total negativity. Exhibition giant Vue this year dipped its toe into U.K. distribution with the Italian hit “There’s Still Tomorrow” and off the back of that has now formally launched its very own distribution label, Lumiere.

“It proved our thesis that there is a big demand for those films to be seen on the big screen,” says Vue founder and CEO Tim Richards, who says they’re now in the process of picking up other titles for the U.K. “We’re going for smaller films, with smaller budgets — and that includes British and independent and foreign language.” The goal is to release around 12 films a year in the U.K. (and expand operations to other Vue markets across Europe).

Unlike other distributors, Lumiere obviously comes with the weight of the U.K.’s largest theatrical chain behind it, the scale of which Richards says he’s going to fully utilize to help market Lumiere’s titles with minimum P&A spend, while deploying Vue’s in-house AI technology to choose where and when the films will play.

For Richards, he claims there’s an element of a “self-fulfilling prophecy” when it come downplaying the potential for indie films in the U.K. box office. “There’s a narrative that audiences aren’t there anymore, so the films don’t go to them,” he says. “And yet when the films do go to them, they deliver.”

There’s also optimism that the current crisis is merely the latest in a series of challenges the independent film world has faced and overcome. “In the 25 plus years I’ve been doing this, there’s always been challenges,” says Perkins. “Yet there’s always audiences, and there’s independent sector can come up with stories that can excite and engage them. That’s actually the best part of distribution.”

Thanks to the efficiencies of digital, the barriers to market are now much lower than they were before, as is reaching out to an audience.

“So the challenge for distribution is to is to make sense of the new the new economics of the industry,” says Perkins.

For many, however, as exemplified by “Santosh,” which appears to have been caught in the eye of the U.K. indie distribution storm, the current challenge is one of the toughest they’ve faced. “It’s a really complex arena, and it’s just harder and harder,” says a producer who had a similar struggle to find a home for his feature.

But the crisis has at least provided one source of optimism.

“I mean, it has to bottom out,” says a distributor. “Because it can’t get any worse!”